Nazmul Haque Director & Head of Investment Infrastructure Development Company Limited (IDCOL), Bangladesh

Transcription

1 Effective and innovative business models. What viability for privately led initiatives? IDCOL Solar Home System Program in Bangladesh Nazmul Haque Director & Head of Investment Infrastructure Development Company Limited (IDCOL), Bangladesh International Off-Grid Renewable Energy Conference Accra, Ghana Nov 1~2, 2012

2 IDCOL Solar Home System Program IDCOL is a state-owned development financial institution dedicated to promote/finance infrastructure and renewable energy projects in Bangladesh. IDCOL Solar Home System Program: What is a Solar Home System? Program at a Glance Program Structure Fund Flow and Role of Partners Financing Structure Quality Control Mechanisms Challenges & Mitigations

3 What is a Solar Home System (SHS)? Capacity Appliances Operation 20Wp 50Wp 85Wp Lamp: 2 Mobile Charger: 1 Lamp: 4 B & W TV: 1 Mobile Charger: 1 Lamp: 9 B & W TV: 1 Mobile Charger: hours 4-5 hours 4-5 hours CFL /LED Light Gel Battery DC-DC Converter to run color television, fan, refrigerator etc.

4 IDCOL SHS Program at a Glance Program Target : 4 million SHS by 2016 Program Achievement : 1.66 million SHS by Sep 2012 Number of Beneficiaries : 8.25 million people Power Generation : About 80 MW Fossil Fuel Saving : 165,000 ton/year Job Creation : 70,000 people IDCOL Investment : USD 350 million

5 Program Structure Suppliers Provides approval Seeks approval Technical Standards Committee Supply Equipment Pay for Equipment PO Selection Committee Applies Select POs NGO/PO Provide grant & loan Seeks grant & loan IDCOL Sells SHS & provide service Pay downpayment & installment Grant & soft term credit Operations Committee Household Donors

6 Fund Flow and Role of Partners Multilateral Agencies GoB IDCOL PO Household Provides grant and soft loans Provides technical assistance needed Provides grant and soft loan to IDCOL Provides policy support Provides grants to reduce SHS cost and for capacity building Provides soft loans Provides training, promo support Monitors implementation Identify potential customers Installs SHS Extends micro-credit Provides after sales services Maintain system Repay loan in monthly installments Debt Service Debt Service Debt Service Debt Service

7 Mode of Financing: an Example (a) Market Price of 50 Wp SHS USD 400 (b) Buy-down Grant (Grant A) USD 25 (c) System Price for Household [(b)-(a)] USD 375 (d) Down Payment from Household to PO [15% of (c)] USD 56 (e) Loan Payable from Household to PO [(c)-(d)] USD 319 Loan Tenor 3 years Interest Rate 12% p.a. Monthly Installment Amount USD 8.5 (f) IDCOL Refinance [80% of (e)] USD 255 Loan Tenor 5~7 years Interest Rate 6~9% p.a.

8 A Sustainable Financing Structure Phased -out Subsidy: Capital Buy down Grant Institutional Development Grant ~5 2006~7 2008~9 2010~ ~14 $70 $55 $40 $40 $25 $25 $20 $20 $15 $10 $5 $3 - - Concessional to Semi-Commercial Credit: 2003~ Loan Tenor 10 yrs 6-10 yrs 6-8 yrs 6-8 yrs 5-7 yrs 5-7 yrs 5-7 yrs Interest Rate 6% 6%-8% 6%-8% 6%-8% 6%-9% 6%-9% 6%-9% % of Loan Refinanced 80% 80% 80% 80% 70%-80% 60% 60%

9 Quality Control Mechanisms Physical Inspection Physical inspection by technical inspectors Verification of collection efficiency by collection efficiency inspectors Independent technical and financial audit Training Programs Training for trainers PO Staff / customer training Supplier consultation Lodges complain IDCOL Informs PO Call Centre Household Takes remedial measure PO

10 Challenges & Mitigations Challenges Mitigation Lack of awareness Untested business model Lack of institutional capacity High cost of SHS equipment Lack of quality assurance Lack of fiscal support Promotional campaigns Training programs Social enterprise model with an ultimate goal of commercialization Presence of multiple POs ensures healthy competition Phased reduction nature of grant Institutional development grant / Long-term concessionary credit Staff training program Capital buy-down grant / Concessionary credit facility Local support industry development Technical standard committee Quality control mechanisms by IDCOL Tax holiday Duty free import

11 Replicability Potential : Prerequisites Every market is unique and has its own needs. However the following helps: User access of private sector agencies/mfis/ngos Micro-credit outreach experience of the private sector agencies Adequate financial support from the donor agencies Availability of concessionary credit facility to the executing agencies An agency to monitor quality of products and services Development of local support industry Active support from the government i.e. fiscal benefits IDCOL provided knowledge support to a number of African countries to develop similar programs in their respective countries.

12 Thank You Q & A Infrastructure Development Company Limited (IDCOL) UTC Building (16 th Floor), 8 Panthapath, Dhaka 1215 Phone: , nhaque@idcol.org